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BIOHAZARD 3 was to sequel the events of "4th Survivor", continuing with the exploits of HUNK, a USS agent previously seen in Resident Evil 2. In the story he was to be sent to retrieve a sample of the G-Virus while getting caught up in a viral outbreak on a cruise ship. An alternative standard enemy to the Zombies was envisioned, with the t-Virus infusing plant DNA into infected humans.[1]

BIOHAZARD 3 was the brainchild of its producer, Hideki Kamiya, who began working with FLAGSHIP towards the end of Resident Evil 2's development in late 1997. Having already shown an isolated mansion and a city, Kamiya intended for a cruise ship to be the next setting for the franchise to keep it original.[2] With his ties to FLAGSHIP, artist Satoshi Nakai was brought in to provide creature designs - Nakai would provide designs for the franchise for the next few years.

In mid-1998 Capcom became concerned that the game's sales would be harmed by the upcoming release of the PlayStation 2 console. When Kamiya was instructed to migrate development to the new console, he had the entire plot and designs scrapped.[3] Some aspects of the game may have been recycled for 2002's Resident Evil: Dead Aim, which also featured a viral outbreak on a cruise ship.